Lord Davies of Gower (Con)

My Lords, I thank the noble Lord, Lord Vaux of Harrowden, for bringing forward this amendment, which addresses a very important issue. According to UK Finance, authorised push payment fraud accounted for almost 41% of fraud losses in the first half of last year, while unauthorised fraud decreased by 3% on the year. APP increased by 12%. It is clearly a pressing issue, and I am grateful that we have the opportunity to debate it. The proposition in question would require technology and telecommunications companies, first, to owe a duty of care to their customers to prevent fraud occurring on their platforms and services in general. I do not see an issue with this in principle. Companies should attempt to protect their customers from fraud by implementing general safeguarding measures that prevent against common tactics such as impersonation. I would rather that this did not come from government intervention but was instead the product of a competitive industry, but I recognise that there is only so much that the market can achieve in the short term. I look forward to hearing the Government’s position on this. I am a little more hesitant to offer support to the second condition of the noble Lord’s amendment, which would require technology and telecommunications companies to contribute to the costs of reimbursing victims of APP fraud that has occurred on their platforms or services. While I acknowledge that there is already an existing framework for company reimbursement in the form of the PSR’s mandatory reimbursement measures of October 2024, I am not certain that the policy is transferable to technology and communications companies. The PSR requires banks and payment firms to split reimbursement costs evenly between the sending and receiving institutions, and it is very easy to discern which companies are responsible and therefore liable for payment. Adding technology and communication companies into that framework is not so straightforward. These companies are essentially a third party in the actual fraud occurring: they are neither the sender nor the recipient of the defrauded money; they are the medium through which fraud is made possible but not through which it actually occurs. Responsibility for the fraud and subsequent reimbursement does not seem to me to be as clear cut with technology companies as it is with banks and payment firms. Secondly, the second measure in the noble Lord’s amendment is not thorough enough to support, even if my worries were addressed. The PSR mandatory reimbursement policy, enacted a year and a half ago, was the product of almost seven years of deliberation and policy-making; extending this measure to a whole new industry should face more scrutiny than that which can be achieved for a single amendment. The amendment itself raises questions as to which companies will qualify, what will their contributions be, and how these will fit within the existing requirements placed upon banks and payment firms. These are just a few questions, but there are many more that will need answering if we are seriously to consider this measure as a law. That is not to say that APP reimbursement has not proved an effective tool in mitigating the harmful effects of fraud. According to the 12 months of available data since the PSR introduced mandatory reimbursement for APP fraud victims by banks and payment firms, 88% of lost money in scope has been returned to victims. Nor is it to say that technology and communication companies will not in future be the vehicle by which APP is committed—ever-popular social media and the ever-increasing AI industry will make sure of that. It is simply to say that we do not know enough about the implementation of this measure to support it. I appreciate its aim, and I agree that something must be done to tackle this specific type of APP, but at the moment I am not sure that the amendment adequately achieves that, so I look forward to hearing what the noble Lord has to say in closing.